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Lender support for Eastern Europe welcome, says Invesco manager

By: Caroline Allen | 20 Nov 2012

The decision by three major global multi-lateral banks to pour €30bn into the ailing economies of central and south-eastern Europe over the next two years is welcome, says Liesbeth Rubinstein, Emerging Markets Fund Manager at Invesco Perpetual.

“Russia normally grabs the news headlines emanating from Eastern Europe with stories about its abundance of natural resources or government plans to privatise state-owned industrial assets.”

“Turkey has also enjoyed some headlines recently with the decision by Fitch, the ratings agency, to upgrade the country to investment-grade status in early November, a privilege last held in 1994. By comparison, smaller economies in the region like Poland, Czech Republic and Hungary tend to struggle to gain media exposure,” she said.

This may change following a joint initiative from the World Bank, the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD), which have jointly agreed a new action plan aimed at supporting economic recovery and growth in central and south-eastern Europe.

“The finer details of the plan are not yet known but the thrust of it is that it includes over €30bn of commitments for the next two years,” she added.

The growth plan is a direct response to the continuing impact that the problems of the eurozone are having on the economies of emerging Europe.

The financing will be available in the form of long-term loans to the private and public sector. Although the scheme has been designed to include countries in the Balkans and Baltics, based on previous experience we would expect Poland to be the biggest beneficiary, followed by the Czech Republic and Hungary.

According to analysts at Citi Research, Poland could receive about €12bn from the facility with the Czech Republic and Hungary’s share of the pot amounting to €2bn each.

“Faced with continued uncertainties from the eurozone, we welcome the injection of fresh money into central and south-eastern Europe as it will support growth and employment in the region,” Rubinstein said.